In thinking about this, it looks like this can be written as a recursive
routine.B  Is this correct?
Right now I run a batch file and increment the level for each step.

It might be easier for us to help of if you start with a new thread or
summarize at least the current input and wanted result.

If you want recursion in XSLT you usually need apply-templates instead
of copy-of so somewhere instead of
  <xsl:copy-of select="key('SemanticDomainByParent', $parentSD,
$lookupDoc)"/>
I supposed you either need to use apply-templates or you want to store
the copy in a variable and reapply templates with the level variable or
parameter increased.